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Zimbabwe’s Hyperinflation Money Demand Model

Author

Listed:
  • Albert Makochekanwa

    () (Department of Economics, University of Pretoria)

Abstract

The research attempts to empirically study the demand for money, especially the magnitudes of the price expectation and real cash balance adjustment for Zimbabwe. Price expectation and real cash balance adjustment models are estimated. The results show that both the interest rate and the rate of change in prices are relevant variables for explaining the variations in the demand for real cash balances in Zimbabwe. Overall, the findings suggest that the Zimbabwean hyperinflation does not appear to have been a self- generating process independent of money supply.

Suggested Citation

  • Albert Makochekanwa, 2007. "Zimbabwe’s Hyperinflation Money Demand Model," Working Papers 200712, University of Pretoria, Department of Economics.
  • Handle: RePEc:pre:wpaper:200712
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    File URL: http://www.up.ac.za/media/shared/61/WP/wp_2007_12.zp39495.pdf
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    Cited by:

    1. Terrence Kairiza, 2009. "Unbundling Zimbabwe’s journey to hyperinflation and official dollarization," GRIPS Discussion Papers 09-12, National Graduate Institute for Policy Studies.

    More about this item

    Keywords

    Hyperinflation; Real Cash Balances; Price Expectation; Equilibrium; Error Correction Model;

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • P24 - Economic Systems - - Socialist Systems and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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